Charity Navigator rates organizations on how they spend donations

Many people are especially generous this time of year, donating money to a worthy cause close to their hearts. But many charities with ambitious goals don't always spend donations wisely.

Inner-City Arts is a place to develop creativity and build self-confidence. It offers free programs for Inner-City kids in the heart of downtown Los Angeles' Skid Row. It's scoring high marks for putting its money in the right places.

"I think our transparency really allows people to have confidence in us. That we do spend the money that are donated to us very, very, carefully and keeping each individual kid in mind," said Bob Smiland, CEO of Inner-City Arts.

Inner-City Arts scores four stars, the highest possible rating from Charity Navigator, a website that ranks more than 6,000 charities nationwide on how efficiently they're run and how effectively they spend donors' contributions.

Some other four-star charities in Southern California include Goodwill, the Los Angeles Regional Food Bank, and the Los Angeles County Museum of Art.

Charity Navigator says some charities do a much better job putting those contributions to good use. Spending more on programs and not administrative costs is crucial, but it's not the only criteria for earning a high rating.

"Because even if 99 cents on the dollar is going to program, if it's a lousy program and it's an ineffective program, so what?" said Ken Berger, CEO of Charity Navigator.

Another reason for the four-star rating is Inner-City Arts' ability to grow revenue and spending, and for having enough cash reserves in case contributions dry up.

While Inner-City Arts gets good marks from Charity Navigator, other charities -- including the Wildlife Waystation in the Angeles National Forest -- do not. But it says being a good charity is more than just getting a good score.

The Wildlife Waystation is a sanctuary for some 400 wild and exotic animals. But with donations way down in recent years, the 160-acre facility is facing extinction. Charity Navigator gives it a one-star rating, saying Wildlife Waystation's fundraising expenses are high and it has no rainy-day fund.

"If you're spending more than you're taking in, for whatever reason, no matter how noble it is, what you could end up doing is destroying the very organization. So you'll ultimately not be able to feed any animals if you're spending more than you take in on an ongoing basis," said Berger.

Founder Martine Colette says the Wildlife Waystation is now operating on a skeleton crew and doesn't have unnecessary expenses.

"It's not like we're a charity that can economize and say we're not going to print certain materials or we're not going to do certain programs. Our inventory eats and our inventory must be looked after every day," said Colette.